Introduction
This article will provide insight and step-by-step instructions for the Grant Shares Outside of the Stock Incentive Plan workflow. See this article for steps on Granting Shares Under the Stock Incentive Plan.
Use this workflow to grant restricted stock to founders or other stockholders outside of the Stock Incentive Plan (SIP). This workflow includes options to attach a joinder to the stockholder's agreement, and to include IP assignment or contribution agreements.
This article covers using the generative path in the workflows. If you would like instructions on how to upload granted shares, follow the steps below but select Upload Previously Awarded Stock Grant on the first screen.
Grant Shares Workflow
Below you will find information about each step in the Grant Shares workflows (in order):
- Getting Started
- Define Stock Distribution
- Include IP Assignments
- Request Approvals
- Select Stockholders
- Checkpoint
- Wait for Approvals
- Wait for Signatures
- Wait for Process to Complete
Getting started
From the company workspace click on Start a New Workflow. The Grant Shares Outside of the Plan workflow is located in the Equity section of the available company workflows.
Select Create New Stock Grant(s). Check the first box if these are Founder Grants and check the second box if all grants will be issued at least at FMV. Note these options will affect steps later in the workflow.
Define Stock Distribution
Click Add Stockholder. Select an existing user, or you can select to create a new user. If you create a new user, there will be an additional step in the workflow to send an invite to new users. Enter the details of the grant, including the class of stock, number of shares, the price per share, and any vesting restrictions, and click Save.
If you checked that these are Founder Grants in the previous step, you will see a button to Add Founder.
To make any changes to the listed grants, click the Edit button. To remove a grant, click the X button. Once all grants have been added, click Continue.
Include IP Assignment Agreements
Select if any of the grantees require an IP Confidentiality and/or IP Contribution agreement. By default, all grants will be set as No for each agreement.
Click the Edit icon in the Actions column to check which agreements should be included and click Save.
Request Approvals
Select the method to use for the Board and Stockholder approvals. If necessary, you can select different options for both the Board Approval and Stockholder Approval.
The first option is to use the generated Board and Stockholder Consent Approval. The consents will be generated and then sent out for signature.
The second option is to upload a drafted approval by selecting Use your drafted board consent to request approval. This option will allow you to upload an unexecuted board and stockholder approval document to be sent out for signature.
Selecting Approve in a separate workflow will allow you to run the approval workflow at a later time. You will not be able to continue with the Grant Shares workflow until the approval is complete. Selecting this option allows you to bundle this and other resolutions all in one workflow. This resolution will be outstanding and queued to be included when running a Board Consent or Board Meeting Minutes workflow.
The final option is to upload a signed approval instead by selecting This approval has already occurred. This option will allow you to select a previously executed approval document to approve this specific action. This document can be selected from your Data Room or uploaded.
There is an option to Waive Stockholder Approval if allowed by your company's Bylaws and other operating documents. Consult with your legal counsel on using this option.
Select Stockholders
If you selected to generate the Stockholder Approval, select which stockholders should be included. Note that a majority of the stockholders must approve the consent. The bar will turn from red to green once a minimum percentage threshold has been met.
Checkpoint
Review the documents carefully. Edits can be made to any generated documents. If necessary, click to Share Documents with others, edit the email that is sente out, or select to have your legal counsel review the grant. When you are satisfied, click Continue. Once you continue forward, documents will be released for signature and will not be available for modification.
Wait for Approvals
The workflow will pause until all required approvals have been collected for the resolutions. Once approved, the workflow will continue.
Wait for Signatures
The workflow will continue once the grant documents have been reviewed and signed by the stockholder and a company representative.
Evidence of Share Purchase
If applicable, the company will be prompted to upload proof of purchase, to provide evidence that the shares were paid for in full.
Wait for Process to Complete
If there are any pending tasks, the workflow will pause until they have been completed. If you added any new users, there will be an extra step to invite those new users to your account.
When all necessary signatures are gathered and there are no outstanding tasks, the workflow will complete. The new agreements and certificates can be found in the Data Room. Each holder in your company also has access to the My Equity page where they can see documents, vesting schedules, and other details of their holdings.
Screenshots are for illustrative purposes only.
Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.
Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.
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